Category Archives: Funding Retirement

Cost-Effective Ways To Enjoy Retirement

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This post was contributed to Leisure Freak by personal finance blogger Ted James.

Approximately 22% of Americans have less than $5,000 saved for retirement, according to a study cited by The Motley Fool. Additionally, 15% have no retirement savings at all. If you have very modest savings or none at all, you’ll need to live off your Social Security benefit during retirement. While the amount you’ll receive depends on your work record, the average monthly Social Security benefit was $1,509 in 2021. But you can still enjoy your golden years if you follow these tips, presented below.

Cost-Effective Ways To Enjoy Retirement

Photo Credit: Cottonbro via Pexels

Create a Budget

To create a budget, such as one following the 50/30/20 rule, first determine your fixed monthly expenses. These include your mortgage or rent, utilities, groceries and loans, and credit cards. You can’t eliminate these expenses, but you can reduce their payments. Try refinancing your loan for a lower rate, reducing utility usage, or negotiating a lower interest rate on your credit card.

Mixed Up Money notes that the most challenging part of creating a budget is finding ways to cut back on nonessential expenses because they’re difficult to track. These expenses can include dining out, buying gifts, taking vacations, and purchasing magazine subscriptions. Keep receipts and check your bank and credit card statements to see where you’re spending. 

Perhaps the most important aspect of your budget is planning for your retirement goals. You can be doing fine right now with your budget, but have you factored in the cost of retirement living or travel? When creating this document, project for the future. What income will you have after age 65? What are your primary goals once you retire, and how much will they cost to achieve? Once you factor in these components, you will be budgeting for more than now – you’ll be budgeting for your retirement.

Downsize

Downsizing means less maintenance and lower bills. It also allows you to find a property better suited to your needs as you age. Furthermore, if your home has increased in value over the years and your mortgage is almost or entirely paid off, downsizing to a cheaper property may leave you with a lot of equity. 

However, there are some potential disadvantages to downsizing. These include:

  • Fewer belongings. Some people get emotionally attached to particular items and may find it difficult to part with them.
  • No room for overnight guests. Family members who’ve stayed over in the past may now have to book into a hotel when they visit.
  • Lack of privacy. Smaller and fewer rooms make it difficult to get away from other family members when you want time alone.
  • Less recognition. Some people are more concerned with how others perceive them than with comfort and may find that moving to a smaller property doesn’t project the image of success. 

If you choose to downsize, you can also decide whether you want to sell your larger home or rent it. This decision will likely come down to money. Can you rent the property for more than you owe on it each month? If not, are you willing to break even in order to keep the equity? Or do you need the money in hand right now that would be available through a sale? 

Take in a Lodger

Taking in a lodger can help with expenses. Unlike tenants, lodgers are easier to evict should any problems occur. Lodgers also provide extra security for your home, particularly when you’re away. Check out the short-term rental laws in your area before considering renting a room to a lodger.

Part-time Work

Earn extra cash by freelancing to meet expenses and boost your bank account. One increasingly popular job is becoming a medical coder. In addition to performing critical behind-the-scenes tasks like accurately documenting patient data, medical coders determine a patient’s diagnosis and any procedures performed. By taking medical coding courses online, you’re equipped to learn industry standards, including how to use the Healthcare Common Procedure Coding System, (HCPCS) and Current Procedural Terminology (CPT) codes. 

Whatever type of work you pick up, if you decide to start a business using your skills, forming an LLC gives you tax advantages, flexibility, limited liability, and less paperwork. Avoid expensive lawyer fees by filling out the paperwork yourself or using a formation service. Check out your state’s rules for forming an LLC before proceeding, as they differ from state to state. 

Less Stress and More Enjoyment

Having a fixed income in your golden years doesn’t mean you have to worry about finances. Taking steps, such as budgeting, downsizing, working part-time, or taking in a lodger, can make your later years less stressful and more enjoyable.

 

Much thanks to Ted James for contributing this article that shares cost-effective ways to enjoy retirement.

Author Bio:

Ted James is a husband, father, dog owner, and rock climber living in the Pacific Northwest who devotes a large chunk of his time helping people get back in the driver’s seat of their finances. He created his site, Ted Knows Money, to share money tips and help people get complete control of their finances.

Passive Income Ideas for Retirees

Funding Retirement, Income Streams

Passive income is always a great way to supplement your main source of income and earn more money each month, and many people use it to retire early. That said, you don’t have to stop generating passive income after retiring. In fact, most retirees have even more time to spend managing alternative forms of income than they did while they were working.

This article will cover some of the best ways for retirees to earn substantial passive income and continue to make money throughout retirement. Once you take the time to set them up, these ideas offer a surprising amount of income and require very little ongoing work.

Passive Income Ideas for Retirees

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Renting Out Space

Renting out space is one of the simplest strategies for adding passive income, and many retirees have extra rooms in their homes. Depending on your location and the size of the space, you could earn hundreds of dollars per month by renting out a single room.

Websites like Airbnb are the most common way to rent out space as a secondary source of income, and they facilitate important aspects of the transaction like payment and vetting tenants. Even small rooms can be worth a lot of money if you live close to a major city.

Renting Out Storage

While most people think of short-term tenants when they think about renting out space, you can also earn money by renting out extra space for storage. Storage space typically doesn’t demand as much money, but there are a few reasons to consider this approach.

The most obvious benefit of renting out space for storage is that you don’t have to host visitors in your home. While the vast majority of guests are respectful, living with a stranger will likely impact your comfort at home. Some people are willing to give up some of the money they could have earned in order to maintain their lifestyle.

There are a growing number of services designed to connect renters with storage space, although demand and availability still vary widely from one location to another. Look into the options in your area if you’re interested in renting out extra space for storage.

Peer-to-Peer Lending

Most loans are provided by a bank that offers money upfront, but you can now earn money as a lender by contributing to a peer-to-peer lending fund. These solutions offer lower interest rates to borrowers relative to those available with most banks and credit unions, and they give lenders the opportunity to earn more in interest than they could with a savings account or certificate of deposit.

Lending obviously comes with certain risks that aren’t involved in other methods of saving and investing, but peer-to-peer lending services mitigate risk in a number of important ways. Like conventional lenders, they perform credit and background checks to ensure each applicant is a qualified borrower.

Depending on the service you use, you may be able to make offers on individual loans or contribute to a fund that’s used to cover a wider range of loans. As with any other investment, diversifying loans helps mitigate risk and prevent a single bad borrower from ruining your investment.

Similarly, you can target higher returns by bidding on loans with a higher level of perceived risk. More risky borrowers are more likely to default, but you’ll be compensated for that risk with a better interest rate. The right balance for you depends on your risk tolerance and whether you could afford to lose the money.

Peer-to-peer lending services often work with people who couldn’t qualify for traditional loans, so this form of passive income also provides an opportunity to help people in difficult financial situations. Of course, it’s up to you to determine which applicants you can trust to pay back the loan.

Investing in Real Estate

Investing in real estate is a common financial goal for people of all ages, but retirees are in the unique position to dedicate their time and resources to this kind of passive income. Real estate can be a time-consuming field, so it isn’t always easy to manage if you’re also working a full-time job.

If you’re new to real estate, consider starting with a rental property to start earning consistent income after making your initial investment. Keep in mind that you’ll need to budget for operating costs and other expenses, especially if you’re planning to manage multiple properties.

In addition to the money you earn in rent, real estate offers the potential to increase in value over time. Of course, these changes are dependent on the housing market in your area, so it’s important to understand market trends before investing.

It will likely take years to break even on your rental, but property is a worthwhile investment that will continue to hold value throughout the rest of your life and beyond. Properties are also relatively liquid, so you should be able to find a buyer if you ever change your mind.

Flipping Properties

While most new investors focus on rental properties, you can also make money by buying old or rundown properties, fixing them up, and selling them at a higher cost. Flipping homes involves a wide range of skills and knowledge, so it’s not right for everyone. That said, you could potentially earn a substantial amount of money if you’re able to identify good values.

If you’re new to flipping properties, consider working with someone who has firsthand experience on similar projects. They’ll probably be willing to work with you if you offer funding along with a cut of the profits, and their expertise will help you manage renovations while minimizing unnecessary costs.

People of all ages can pursue lucrative passive income projects, but retirees often have even more time to invest in a new source of income. These are just a few of the most effective ways to generate a reliable income without going returning to your career or taking a part-time job.

 

This informative post was contributed to Leisure Freak by Logan Allec at Money Done Right.

Logan is a CPA, personal finance expert, and founder of the finance blog Money Done Right, which he launched in July 2017. After spending nearly a decade in the corporate world helping big businesses save money, he launched his blog with the goal of helping everyday Americans earn, save, and invest more money.

How I’ve Managed Income During Early Retirement

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One of the challenges to early retirement is figuring out how to develop a reliable long-term income strategy. After decades of clocking-in and receiving regular paychecks for our efforts, retirement brings a totally different way of living both mentally and financially. This was something I worried about before retiring. As I approach my 10 year FIRE anniversary I thought I would share how I’ve managed income during early retirement. I’ve found that it isn’t rocket science even without having a million dollar plus retirement portfolio. It takes having the discipline to stick to an informed and verified plan. A plan that is monitored during retirement and allows for flexibility to adjust as required when conditions or projections change.

How I’ve Managed Income During Early Retirement

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The Way I Managed Income During Early Retirement 

Basic principle: Income during retirement must be greater than or equal to (>) lifestyle budget

There was no extreme early retirement strategy. We chose smart frugal living to save money and lived our retirement lifestyle for many years before we retired. We understood what and how we liked to live. A big part of our strategy was developing a split budget based on our different incomes. We then saved enough to support our individual budgets in retirement. This gave us a solid understanding of what it cost to both sustain and enjoy our chosen lifestyle. With that in mind we based our early retirement funding needs on that budget. 

Early retirement income sources: Where our income comes from now and later

When we retired almost all of our retirement savings were in 401K, IRA, and Roth IRA accounts. We then rolled our 401K account funds into IRAs. In my case I was age 51 and my wife retired a few years later at the age of 58. We also had some cash in savings accounts. Our income during early retirement would come from our IRAs and the cash savings. Later we will have Social Security to also provide retirement income and lower our savings withdrawal rate. 

Withdrawal plan: Establishing a sustainable withdrawal rate

We knew what we needed to receive in income during early retirement since our budget was well known. Instead of settling on the often touted 4% withdrawal rate plus inflation each year we used our required budget amount. Then calculating its probable sustainability in retirement calculators (FIREcalc) using our portfolio amount and estimated future earned Social Security income.

My initial withdrawal rate was about 4.6% and my wife’s initially 6% of her holdings. Hers would only be that higher rate for 4 years. Then her withdrawal rate will drop to 3% once her social security payments begin. My withdrawal rate has dropped over the years. It will also decrease to an estimated 2% range once we’re eligible for Medicare and when I begin Social Security at full retirement age. This along with historical investment cycles was considered in the calculation when using the retirement calculator resulting in 100% success. Basically we accept having a higher withdrawal rate early in retirement for a short period of time with lower withdrawal rates later once our earned Social Security and Medicare is available.      

Retire early and often: Where any earned money during retirement goes

I had always considered pursuing opportunities of interest and passions in early retirement. My retirement lifestyle was funded by my IRA so anything earned was extra money. Any earnings from my retirement gigs and a short encore career were saved in new 401K accounts, used to pay off our small mortgage, and put into a savings account as cash. 

Portfolio income distribution: It’s a bucket thing

We use a portfolio bucket strategy to provide income during early retirement. Within our retirement funding IRA is a cash bucket that we receive our monthly direct deposit distributions from. As with our budget, we keep separate bank/credit union checking and savings accounts where our individual IRA monthly distribution goes.

Our portfolio is diversified with various stock and bond funds. All interest and dividends are directed to the cash buckets. Selected assets are occasionally sold to maintain our desired cash bucket amount. When I was working through my bucket list of paying opportunities my portfolio’s cash bucket was 6 to 8 months of my income distributions. Now that I have worked through my list and I’m no longer actively pursuing paid adventures my IRA cash bucket strategy is to have closer to 2 years cash, as is my wife’s.

Unspent monthly distributed money that we receive is saved in our bank savings accounts to be used as needed when monthly expenses exceed our distribution amount. Such as in months when annual property taxes or bi-annual auto insurance are due and our travel months. I also keep nearly 2 years cash in savings and CDs. If/when I take on a new paid adventure then cash/bucket adjustments can be made. 

Getting income during early retirement without penalty: Pre age 59 ½ access to retirement accounts  

Most of my savings was in tax deferred retirement accounts. My early retirement strategy relied on the SEPP 72t (Substantially Equal Periodic Payment) rule to get penalty free distributions before age 59 ½. I took a chunk of my portfolio to set up an IRA and locked into a SEPP 72t at the age of 51. It provided a fixed monthly distribution until I reached the age of 59 ½. I used these distributions to fund early retirement and paid income taxes based on my income tax rate for the year.

When I worked in paying opportunities I routed those employment earnings back into savings and mortgage elimination. My wife stayed working until age 58 to reach her 20 year service anniversary which gave her some retirement benefits. She saved 2 years of retirement funding in her savings account and didn’t need to begin IRA withdrawals until age 60 when the early withdrawal penalty would no longer apply.

Managing Taxes: Starving the Tax Monster

I purposely try to under-withhold taxes within the underpayment thresholds to avoid penalty. I never want to get a tax refund. Even though a savings account pays little interest it is still better than an interest free loan to the government. Not to mention delayed refund potential due to all the tax filing fraud that seems prevalent. When I work in paid opportunities it does raise my tax rate. I would set my W4 to withhold taxes at the single rate with 0 allowances to withhold the maximum. My portfolio distributions has a tax withholding of 10%. Even with that, when I worked in retirement I still owed money at tax filing time.

Without paid work our real tax owed is 5% to 6% of total retirement income. Our IRA financial planner’s system only supports 10% + withholding for federal taxes. So I suspend tax withholding on our IRA distributions from January through June and then have them apply the 10% withholding rate until year end. This works out where we owe a very small amount at tax filing time. We have no State tax withheld from our retirement income but fortunately our low taxable income means only paying at most a couple of hundred dollars a year. 

Social Security Income: We earned Social Security by paying into it and plan on getting it

Social Security seemed so far off when I first retired almost a decade ago. Now it is knocking on our door. Aside from all the strategies to maximize Social Security, when to apply and receive benefits is a very personal thing. We have run the numbers through every scenario on retirement and Social Security calculators. Based on our lifetime income differences and thus the resulting benefit amounts between my wife and I, our plan is she begins her benefit at age 62 and I wait until Full Retirement Age (FRA) 66.7. That time is still years away and I can decide then whether to wait until age 70. It will all depend on whether we need it due to market and portfolio conditions or any changes to Social Security that may come. 

 

That’s it in a nutshell. As you can see there’s nothing complicated. 

Enjoying Retirement With A Pension? Beware, Treasury Opens Door For Trouble

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Fortunate are those who can enjoy retirement with an employer monthly pension check. Especially from a fully funded pension plan. After years of dedicated service to an employer, the hard-won guaranteed retirement income for life is a valuable asset to have. Even if you don’t have a pension, you probably know a loved one that does.

Something happened on March 6, 2019 without any big announcement or fanfare – The TRUMp administration Treasury rolled back a retiree protection that had been put in place to head off abuse and scheduled to be cemented into policy. They ended rules preventing companies from buying out their retired employees monthly pension with lump-sum offers. Now the door is open for trouble down the road for contacted retirees who fail to properly evaluate and act when confronted with a pension buyout offer.

Enjoying Retirement With A Pension? Beware, Treasury Opens Door For Trouble

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Retirement With A Pension Is Now a Rare Benefit To Have

Companies have been cutting and ending pension benefits for decades. The pension promises to long-time employees are often broken, from benefit qualifying rule changes to bankruptcy reorganization. But even those who have retired with their earned monthly pension can be caught up with corporate efforts to reduce keeping up their end of the bargain. With today’s corporate environment and leadership dynamics, corporations just don’t want pension obligations on their books.

The corporate tool used to shed existing pensioners from their books was to off-load them to an insurance company through what is called pension de-risking. Instead of retirees having a monthly pension guaranteed by the PBGC, with de-risking they were moved to an insurance annuity with their limited annuity protections. But now corporations will have another available tool to rid themselves of pensions, they can make offers to buyout existing retiree pensions with what may appear to be a generous lump-sum. But is it really all that generous?

Why Does Offering Lump-Sum Pension Buyouts Open The Door For Trouble?

What’s the big deal? Many who have a pension benefit are allowed to make a decision at retirement time whether to take a lump-sum or the monthly annuity. They are often not equal, with one having a greater value than the other. There are a lot of considerations that depend on your unique situation to make that decision, like longevity and personal financial discipline.

Those same considerations are necessary for anyone contacted during their retirement with a pension buyout offer. But not everyone was given that annuity vs lump-sum option when they first retired and may be caught off guard. Being contacted now mid-retirement may be the first taste of this critical decision.  

What Needs To Be Considered

First, don’t be fooled by what looks like a huge lump-sum number. Fixed guaranteed monthly retirement income is a luxury that’s expensive to replace. The number offered is most likely insufficient to be fully equal to the real value of your monthly pension. Not to be cynical, but we need to consider that the lump-sum pension buyout offer isn’t out of love for the retiree. Also, especially with this administration, nothing is done by government unless- One, it is politically advantageous, or Two, it was heavily lobbied for by corporate special interest. This pension protection roll-back smells like number Two is smeared all over it. With that in mind….

Check The Lump-Sum Buyout Amount Through An Annuity Calculator

The lump-sum offer is supposed to replace your monthly pension. See if it is by checking an annuity calculator to verify if it could replace your full pension payment amount. Not that you want to take the lump-sum buyout to replace it with an annuity. But instead to see just how close the lump-sum amount is to being able to do so. Use your pre-tax / pre other deduction full pension payment amount. Include in your annuity comparison extras your pension may have like a survivor benefit, inflation protection, etc. The idea is to figure out if the lump-sum amount is really a good buyout offer that fits your unique retirement needs or quickly see if it’s a low-ball attempt to be rid of you.

Retirement Health Insurance

If you have a retirement health insurance benefit, then your premium is most likely deducted pre-tax from your pension check. Accepting the lump-sum buyout offer means your insurance premium would now have to be paid with after tax money from other sources. It might be very difficult to qualify for the schedule A medical tax deduction at tax filing time. Depending on how much you pay this may be something to take into consideration.

Get An Idea About Your Pension Health

As a retiree you most likely get a yearly update about your pension plan financials. Whether your pension plan is fully funded or underfunded, it may play into your decision. If it is underfunded and headed for failure it is guaranteed by the PBGC. You might want to see what the maximum PBGC payout amounts are for your situation if it was to ever go into default. Do some research to understand where the plan stands and where you stand if the worst should ever happen to the pension plan.

Run The Lump-Sum Amount Through A Retirement Calculator

A big lump-sum might look like a fantastic offer but will it be enough to continue funding your retirement?  You must roll the money into an IRA to defer being immediately taxed. It’s then part of your overall portfolio. Run your numbers through a retirement calculator to make sure it can even meet your needs for as long as you are on the planet.

Self Assess Your Risk Tolerance

Accepting the lump-sum buyout offer means increasing risk in your retirement funding. That’s the whole point of companies making these offers in the first place. It’s all about moving the risk from them to the retiree. There can be rewards with an invested lump-sum if market conditions are favorable. But the opposite happens during market and economic downturns. Decide if that is something you can or want to handle in retirement.

Evaluate Your Health and Longevity

If your health is failing then you might be tempted by a lump-sum buyout to leave something more behind for your heirs. There are also long-term care considerations. If you have no long-term care plan, your State may treat monthly pensions differently than lump-sum assets held in an IRA when it comes to Medicaid.

Talk With A Trusted Certified Financial Planner

Consult with a CFP before making any moves. They can weigh in on the offer and provide insight into other things that should be considered. They can show you the best portfolio diversification strategy to use. You can also see whether your risk tolerance favors either staying in the annuity or taking the lump-sum buyout offer. After all, you want to enjoy your retirement, not worry about your finances.

 

Don’t blindly believe a slickly worded pension buyout offer or any hard-sell limited time offer pressure. Do your research and consult with a CFP professional. The last thing anyone wants to do when contacted out of the blue with a pension buyout is to later end up regretting their decision.

How Does Early Retirement Zero Earnings Impact Social Security Estimates?

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Here’s How Mine Went

One of the knocks on early retirement is how it can negatively impact one’s future Social Security benefit. My recent Social Security estimate with zero earnings going forward is somewhat surprising. We pull our Social Security estimate to get an idea of what it will be. We then can use that information in our retirement plan and plug it into our favorite retirement calculator. It’s quite obvious when looking at our SSA estimate that claiming our benefit early at age 62 will result in a lifetime of lower monthly payments.

Choosing early retirement means we have decisions to make about when to claim our future benefit at age 62 or later. But how accurate is our Social Security estimate? The problem is that it uses something that’s a little less clear. It has a line that says: Your estimated taxable earnings per year after 2019……………..$XX,XXX. It uses our prior year’s earnings in the benefit calculation going forward to the reported filing ages to come up with the estimated age based payment results.

That earnings part of the Social Security calculation will be lower than the optimistic forward earnings estimate they used when it drops to a lesser number or to NONE once we retire early. Based on that sometimes overlooked line, one would expect that our received benefit may be lower than what we are looking at and used in our pre-retirement planning. But how much lower?

How Does Early Retirement Zero Earnings Impact Social Security Estimates?

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My Social Security Estimate With Zero Earnings

There are a lot of moving parts to how our Social Security benefit is determined. It’s presented to us in today’s dollars so we can make a mental association. We get a monthly benefit figure for age 62, our Full Retirement Age (FRA), and age 70. Before I reveal my numbers it’s important to understand the basics of how our Social Security is calculated. At a high level it has 4 components that go into it.

1- Social Security Payment Years

To qualify for Social Security benefits we must have had at least 10 years of paying into it through accumulated work time with a significant amount of earnings. The benefit is calculated based on the highest 35 years of earnings. If we have less than 35 years of paying into Social Security then $0 is used for the deficit number of missing work years and averaged for our benefit calculation. But it is more complicated than just that.

2- Surprise! Social Security is means tested through PIA

Primary Insurance Amount, aka PIA, is a weighted formula that gives higher Social Security benefits relative to overall career earnings for lower earners than for higher earners. The PIA formula uses what’s called your average indexed monthly earnings (AIME) in the calculation.

3- Our ancient salaries of decades past are normalized for inflation with AIME

The Average Indexed Monthly Earnings, aka AIME, is an inflation adjustment that uses wages instead of consumer prices. It reflects the U.S. economy’s average wage to normalize our years of earnings. It‘s done by indexing that puts our earnings in a comparative basis within the earnings level of the US by using the average wage indexing series. I have yet to find all the parameters used to get the actual index factor Social Security applies in our estimate against long past earnings years. Not surprising since it would change yearly as our estimate is always updated to be presented in today’s dollars.

4- Bouncing our AIME against PIA

The PIA is calculated using our highest 35 years of wage-indexed earnings and if we have less than 35 years then those missing years will be marked as $0 to make up 35 years. It is then averaged out and expressed as a monthly amount. That average amount is our AIME. Our AIME is then bounced against the PIA. Within our AIME amount the PIA applies a graduated percent of benefit. It goes from the lowest earnings bracket up to higher earning brackets. There are bend points within the PIA formula which represent earnings segments. The PIA formula gives 90% of our AIME for the first segment. Segment one is currently the first $826 of our monthly AIME. The next earnings segment between $826 and $4,980 is at 32% of AIME. High earners with AIME amounts above $4,980 get 15% of their AIME in the last segment.

For example, If our AIME is $5835. Then segment 1 is $826, Segment 2 is $4980, and Segment 3 is $29 ($826+$4980+$29=$5835). Our PIA bend point/earnings segment 1= $826 X 90% = $743. Bend point/earnings segment 2=$4980 X 32% = $1594. Bend point/earnings segment 3=$29 X 15% = $4. Total PIA benefit is then $743 + $1594 + $4 = $2341 per month.

Should Future Earnings of NONE Impact Our Social Security Estimate?

It’s easy to believe that having zero earnings going forward will impact our Social Security estimate. We are most likely earning far more later in our careers than we did some 35 years ago even after indexing. A pre-retirement estimate doesn’t consider retirement before collecting benefits. Basically the projection is optimistic before we retire by calculating that we will continue earning the higher later life earnings rate until our Social Security filing date. All those projected higher earnings years then override older lower earnings years. It actually says: *Retirement    You have earned enough credits to qualify for benefits. At your current earnings rate, if you continue working until…

When I looked back 35 years from my early retirement year to 1975, my part-time earnings was $1002 that year. If I had $0 earnings going forward then that 1975 earnings would be counted as part of my 35 years for my AIME, not the last year’s reported earnings projection. Even when indexed that 1975 earnings amount should drag the Social Security estimate down once Social Security is calculated going to $0 income projected forward. I did accept that my actual Social Security benefit would be lower than what I looked at and used in my retirement planning before pulling the early retirement trigger. I just didn’t know how much.

High Income Earners

None of this may matter to anyone having 35 years of earnings above the Social Security earnings cap. The cap for maximum taxable earnings for recent years are –

  • 2019 $132,900
  • 2018  $128,400
  • 2017 $127,200
  • 2016 & 2015 $118,500
  • 2014 $117,000
  • 2013 $113,700
  • 2012 $110,100

If you have 35 years of high earnings that surpasses the Social Security earnings cap, then you qualify for the maximum Social Security payment amount. For 2019 that is $2,861 a month at full retirement age.

How My Social Security Estimate with Zero Earnings Going Forward Turned Out

My Social Security estimate at age 51 when I retired early with 35 years employment earnings.

My estimate includes 2 years working part-time when I was in high school within my 35 year earnings history. But those and other lower earning years of my youth wouldn’t matter. There is a high projected forward earnings based on the last year of my career in the calculation for another 11 to 19 years (depending on benefit filing age) into the future used to get the displayed benefit payment amounts.

*Retirement    You have earned enough credits to qualify for benefits. At your current earnings rate, if you continue working until…

your full retirement age (66 and 8 months), your payment would be about- $ 2,417 a month

age 70, your payment would be about……………………………………. $ 3,113 a month

age 62, your payment would be about……………………………………. $ 1,687 a month

Your estimated taxable earnings per year after 2010……….  $106,800

As of now I have a total of 42 years of social security recorded earnings because of some sweet retirement gigs. I did things I wanted to do and learn to do for only as long as I wanted to do it. The 7 years of retirement gig’s yearly earnings ranged from a low of $668 to the high of $107K. My best guess is that 4, maybe 5 of my retirement gig year’s earnings ended up higher than earlier indexed earnings years. That obviously should improve my Social Security calculated amount once $0 earnings (NONE) is used in the calculation going forward and my benefit is calculated solely on my highest 35 years earnings history.

Here is a comparative view of some of my early retirement Social Security estimates. It includes the projected earnings listed as part of the estimate calculation.
You have earned enough credits to qualify for benefits. At your current earnings rate, if you continue working until… your full retirement age (66 and 8 months), your payment would be about age 70, your payment would be about age 62, your payment would be about
Your estimated taxable earnings per year after 2010…..$106,800 $2,417 a month $ 3,113 a month $ 1,687 a month
Your estimated taxable earnings per year after 2015……$66,918 $ 2,423 a month $ 3,069 a month $ 1,746 a month
Your estimated taxable earnings per year after 2016……$40,438 $ 2,474 a month $ 3,134 a month $ 1,783 a month
Your estimated taxable earnings per year after 2018……$668 $ 2,589 a month $ 3,279 a month $ 1,866 a month
Your estimated taxable earnings per year after 2019……NONE $ 2,678 a month $ 3,392 a month $ 1,930 a month
I found it interesting when comparing Social Security estimates and reviewing my lifetime of earnings

Of my total 42 years of working and paying into Social Security I had 11 years that paid out high bonuses which allowed me to hit the Social Security earnings cap. I do remember having a few Decembers in my first career when I got a take home pay bump because Social Security wasn’t withheld from my check until the new year. Also included are 13 earlier years where I worked 2 jobs so my wife could care for our kids. Childcare was too expensive even in the 80s so we did what we needed to do. Working 12 hour days boosted my income those years so we could make ends meet and later pay off debt. That helped increase my AIME during those years although it added zero earnings years for my wife’s Social Security AIME calculations.

When I retired early I used the FRA amount of my Social Security estimate in my retirement calculations.

Since I wasn’t retiring with a million in the bank I needed to make sure I could fund my early retirement the way I wanted to. I believed that my Social Security may end up a couple of hundred dollars less once it’s recalculated with $0 earnings going forward. I was OK with that and started my new retire early and often life. But between inflation adjustments and the way Social Security PIA bend points favor lower earning segments, I now find that my FRA benefit amount is a couple of hundred dollars higher. Understanding of course it isn’t apples vs apples. One estimate is presented in 2010 dollars and the latest in 2019 dollars.

Inflation aside, one might think it should be higher since I worked some awesome retirement gigs that replaced some low earning years of my youth. However, that Social Security estimate I pulled way-back-when before I retired projected high forward earnings right up to my benefit filing date, not NONE as it is now. Those old future optimistic earnings figures Social Security used would also override old lesser earning years in the estimate. It would override much more of them than my few years of retirement gigs and a future earnings of NONE going forward to my benefit filing date. Those retirement gigs probably do help with the new estimate but doesn’t fully explain the numbers now being provided.  

What can I say about the impact to my Social Security estimate with zero earnings projected forward —

Hard to completely figure it out without having the full wage indexing factors they used against the small earnings of years-past to calculate my AIME. I can say that the latest Social Security estimate with NONE earnings going forward is better than I was expecting. If we have 35 years of work earnings paid into Social Security before we retire early, that pre-retirement Social Security estimate we pull and run through the retirement calculator might be a lot closer to our benefit amount than we think it will be. Both because there will be no zero earnings years calculated in our AIME and there being a shorter amount of years to our benefit filing date used in the earnings forward calculation.

Anyone who pulls off early retirement in their 30s or 40s with less than 35 years paid into Social Security may find a different result. Especially since there will be a longer calculation to age 62 or older projected forward with their current earnings amount. A more accurate Social Security estimate may only happen after a year or two of lower earnings or NONE. When deciding to retire early, running your numbers with a reduced anticipated future Social Security payment amount should be considered.

I always believed a lower Social Security benefit was a good trade for early retirement and still do.

Social Security may or may not live up to the estimates they give us. I believe that since we are required to pay into it our entire working lives that it will meet its obligations, although possibly reduced. So much can happen with the markets and Social Security but we plan with the data we have. The future is unknown, so we should always add a little worst case scenario planning, just in case. 

The Retirement Calming Effect of More Cash and No Mortgage

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There are a lot of financial decisions a retiree has to make. How to best fund their retirement, when to begin social security benefits, etc. But once that is settled, there’s a couple of decisions a retiree might have to make that can bug us to no end. How much cash should I keep and should I pay off the mortgage? If you have the funds to even consider these questions then the mental conflict is to just keep the money fully invested in the markets. That way it can possibly provide decent returns. I made these retirement money moves and can attest to one under-reported and powerful aspect to these decisions – The retirement calming effect of increasing cash and being mortgage free.  

The Retirement Calming Effect of More Cash and No Mortgage

My Retirement Calming Decisions of Cash and Mortgage

It’s certainly a first-world problem for those of personal finance success. Even talking or writing about it feels a little dirty knowing the struggles of many underfunded retirees trying to figure out how to pay for retirement when there isn’t enough. I am only able to reign in guilt when I think about where I came from to get here. Just another poor working stiff who used frugal living to feed an early retirement plan.

I never questioned retiring with a mortgage when I retired in 2009. There was about $100K still on the bank’s books and I budgeted for the monthly payment. As to cash, I left my first career with only about $20K available. The rest of my retirement funds were all in recession diminished stocks and bonds within my 401k and IRAs.

The Retirement Calming Effect of Cash

Going To One Year Retirement Funding Cash

I did wish that I had set aside more cash but it didn’t overly disturb me. It was just there in the background of the normal “what ifs” all new retirees go through. I had always planned on living a “retire early and often” lifestyle and after a few months put it to action. With my first stepped down retirement gig I continued to live off of my 72t distributions and I used my salary to increase my cash to around $35K. That represented one year’s retirement funding. I invested the rest of my paychecks into the offered 401K and my IRA.

That simple cash increase gave me my first retirement calming taste of having a bigger cash cushion. It reminded me of how I felt when I became non-mortgage debt free. This small cash jump gave me a feeling of calm knowing I added to my financial strength and it told me something about myself. Not only did I feel more confident about my retirement funding, but I didn’t sweat all the market swings as much during this 2010 through 2011 period of my early retirement.

I was a proud risk taker regarding my ditching a long career for early retirement. But I mentally preferred a bigger cash cushion when it came to my portfolio. Financially rational or not, I simply had less market worry and higher retirement confidence.

Going To Two Years Retirement Funding Cash

Two years into my early retirement I left the stepped down retirement gig and started what I call my encore career. I stuck to living off of my 72t and used the new gig’s larger salary like I had done before. Knowing the retirement calming effect I received with my first cash increase, I decided to increase my cash to cover 2 years retirement funding. It provided even more early retirement confidence. I discovered that I find financial calm in using cash to hedge against market volatility.

Going To Four Years Retirement Funding Cash

Years after my encore career and last paycheck ended I decided to once again increase my cash. The market was at all time highs and when running my numbers I found that I could take some chips off of the table to pump up my retirement cash. There’s no doubt about it, I’m really calm now. I should be able to easily outlast a recession or market downturn when it comes and for me there’s nothing more retirement calming than that.

The Retirement Calming Effect of Being Mortgage Free

As I mentioned above, I had never considered retiring mortgage free. It seemed out of reach without staying on the job I no longer enjoyed a lot longer. My total house payment was reasonable after refinancing to lower interest rates and it made for manageable payments in my retirement. I had already dropped below Federal Tax ‘Schedule A’ filing thresholds and wasn’t getting any mortgage interest tax benefits. It was during my encore career after hitting my 2 years cash goal that I made the decision to focus my salary on the mortgage. It was dispatched just 18 months later and I joined the small ranks of mortgage free homeowners. I was surprised at how eliminating this payment made me feel. No matter what manufactured market crisis occurred, I would own my home. It’s an intangible value that provides long-lasting retirement calm and happiness.    

Why How Much Retirement Cash To Have or Using Funds To Clear A Mortgage Are Tough Questions To Answer

The financial argument against cash is its inability to retain value against inflation. My cash isn’t dead money. I do get a little interest from my savings account and money market accounts. I am getting 2.5% from a 13 month CD and will continue to look at other higher interest earning opportunities. Yes, all pay less in interest than inflation. But the majority of my portfolio is invested in the market and I see the difference between cash’s earnings and inflation as the cost of what I call my retirement calm insurance. I find value in the emotional peace and that makes it worth it.

When it comes to paying off the mortgage the financial argument is about the loan interest percent saved in payments vs. the percentage that could be earned if left invested. I locked into a guaranteed return. No matter what else happens in the markets, I have that locked down. But the other benefit is it takes less to live on. When not working as I am now and living off of my portfolio, I’m able to reduce my taxable income by the payment amount. I not only have a guaranteed return but I now will pay less income taxes too.

The argument against both higher cash savings and mortgage payoff includes the lost opportunity for money left in the market for big market gains if invested right. Especially over the long-term. Depending on your goals, this can not only impact your long-term retirement funding but also any thoughts towards leaving a financial legacy to your family. That’s why it’s important to run your numbers through a good retirement calculator to make sure your portfolio will last at least as long as you do. You also need to have a clear legacy plan in place and make sure you can still meet it.

In the end, we all know markets don’t always go up which must also be considered in the arguments for and against having more cash and using funds to pay off the mortgage in retirement.

The Questions That Need To Be Answered

I’m not some super investor, had no inside secrets, nor received a windfall to retire early as I did. I am just an average Joe who decided that I wanted to be free of the rat race and figured out how to pull it off in a way that worked for me. But now that I’m retired, I prefer to not be looking over my portfolio’s shoulder all the time. I prefer the retirement calm of what the extra cash and mortgage freedom provides me.

The questions I needed to answer before making these retirement calming moves were –   

Is now the best time to pay off the mortgage?

We had considered long before retirement that we would sell our home and move to a smaller home in a less expensive real estate market. That way we could be mortgage fee. But after grand-kids came we nixed that plan. I don’t believe it would have made sense to use taxable retirement funds to payoff a mortgage. In my case I had income coming in and no mortgage interest income tax benefits. Payoff also meant reducing my taxable retirement funding needs in the nearer future. Yes, it was the best time to pay it off.

Do the numbers still work with so much cash on the sideline?

When I increased to one year and two years worth of cash this wasn’t an issue. I was happily in retirement gigs and used the extra income to grow cash. This question came in the jump to four years cash while I was relying 100% on my portfolio. Running the numbers through the FIREcalc retirement calculator was my first step. I then made my proposal to my CFP and they also ran my numbers. Yes, the numbers looked good.

If the numbers work, then why risk unnecessary injury playing in a game already won?  

The same question echoed during my decision to retire or stay on the job longer. Do I have something more to prove or can I be happy and satisfied by making the move. I never regretted giving up the title and salary of my career, I had enough. It was easy to answer this question. I had no doubts. I wouldn’t regret about my higher cash savings missing out on any market runs.

Would I really value this as retirement calm insurance?

History and numbers show that staying at two years cash with a diversified asset allocation would work fine over the long-haul. But what I was going for was gaining even less concern about market volatility and being able to fully enjoy my retirement without thinking about finances all the time. The sting of the last great recession hit me hard. When being truthful about what causes me more distress, either having this sidelined money miss out on a bull market run or not having enough cash to get through a long market downturn, the answer was clear.

Are there any other upsides other than the retirement calming effect of jumping up cash?

Along with the memory of the last great recession’s sting is also the memory of all the opportunities to buy heavily devalued investments if only I had some cash. In 2009 as the markets hit bottom and the years that followed, stocks were a bargain. Having higher cash reserves means being able to take advantage of any future investing opportunities.

 

Everyone’s risk tolerance is unique to the investor. Finding the perfect formula that meets both necessary funding needs without adding investor distress is the recipe for a retirement calming portfolio. My mentally preferred recipe just happens to love the higher cash allocation and being mortgage free.

Seek that which keeps you calm, Lokah Samastah Sukhino Bhavantu.

Stop Waiting For Birthdays, There’s No Ideal Age To Retire

Funding Retirement, Retirement Plan,

When asked, when is the best time to retire, do you answer with an age somewhere from 61 to 65? If you do then you are part of a majority of Americans according to a Bankrate.com survey and you most likely answered WRONG. There is no ideal age to retire. The correct answer is when you can afford to retire. When I pose the question as the “best time” to retire and the first thing that comes to someone’s mind is an age, then I suspect there’s a lack of a real retirement plan or one of confidence to back up that “age” answer. It’s just a birthday based retirement hope plan.

Stop Waiting For Birthdays, There’s No Ideal Age To Retire

Photo by Gaelle Marcel on Unsplash

Why Age Comes To Mind, Even When There’s No Ideal Age To Retire

When conversation turns to retirement and I ask people when they plan to retire and they answer with “in “X” amount of years” it’s easy to believe they have an actual retirement plan of some kind. But most of the time I get the “age” answer somewhere between age 62 and 70. People get hung up on age based retirement goals with little thought as to exactly why. Some understand their finances enough to know the money details of why they answered with an age, but unfortunately many who haven’t thought about or haven’t done any kind of retirement planning replies with an age that just sounds like an ideal age to retire.

Dig deeper and it comes down to a psychological association to Social Security and Medicare eligibility along with a pinch of retirement tradition. Then it’s whipped up into hope, whether there is any financial basis to back it up or not.

When I tell these folks I retired at the age of 51 it gets their attention and starts their retirement wheels turning. There’s usually a puzzled look followed with- How? That’s when things get interesting. I get to explain that we do have some power to retire without solely relying on traditional retirement birthday milestones and just hoping for the best. It’s about reaching our ideal time to retire. That has less to do with our age and everything to do with our personal finances.

Forget About An Ideal Age To Retire, Decide To Set Your Ideal Time To Retire

Certainly there are a lot of people with a lifetime of low wages, inconsistent employment availability, or have experienced other financially catastrophic situations during their lives. They are unable to save or adjust their lifestyle enough to escape waiting until their Social Security age requirements to have any kind of retirement. But that isn’t about being your ideal age to retire. It’s still a matter of your ideal time to retire because of your financial situation. However, you won’t know that or have any idea what’s ahead if you don’t get your head in your own game.

When would you want to retire?

As time goes on, shifting our retirement milestone mindset away from age and instead toward our finances may give us a better chance to bring retirement more in alignment with when and how we want to retire. Too many default age based retirements find out at the last-minute that they still can’t afford to retire. Hitting the age to begin Social Security and Medicare isn’t a guaranteed fully funded retirement. There are things that everyone should do to shake themselves free from the ideal age to retire thinking and just hoping it works out.

Set Your Own Financial Retirement Goals

There are a lot of opinions about retirement out there. Take in the abundance of broad stroke financial advice as valuable guidance, not hard rules to conform to. Most of it borders on the minimum to be done. The system is designed to cover the masses without regard to individual initiative to break free from employment and consumer conformity. It’s geared toward traditional old-age retirements. Strive to beat it when you can.

Social Security and Medicare –

Social Security will play a major retirement role for most of us. There’s a lot of talk about delaying retirement until age 70 when we can get our maximum Social Security benefit. Others say to take Social Security as soon as we can. People can weigh the pros and cons of starting it early at age 62 through waiting until age 70. However, those are financial considerations about how it plays into our financial and even our retirement lifestyle goals. Something that even people who retired early, long before being Social Security and Medicare eligible, calculates into future retirement funding plans.

Separate the Social Security and Medicare age requirements from when you see as your ideal time to retire. Make a cognitive decision as to how much they will play in calculating your ideal retirement time.

Age is just part of our financial calculations, like when it’s best to start taking Social Security benefits to reduce reliance on our savings or lack thereof, vs. longevity calculations. There’s also the impact Medicare will have on the budget and future funding needs.

Take control of your future –

It’s done by shedding debt and creating a happy and sustainable budget-friendly lifestyle. Then purposely saving and investing for retirement. A retirement that gets to start once financial numbers are hit, not just hitting an age. Here’s what to do –

Figure out the lifestyle you want to live

Take stock of your current lifestyle and how you want to live in retirement. Figure out the “where and how” you see your ideal and financially backed life as being. Cut waste from your lifestyle and commit to a sustainable plan. Look at retirement like anything else in life. Not what age, but how much will it cost and when can I afford it.

We can set financial goals to be met by a certain age but it’s the financial numbers that we’re motivated to hit, not the birthday. The date is only relevant to measuring and tracking our progress against. See retirement as the biggest purchase of our lives and save for it because it’s a huge purchase that we can’t finance. We then get to dictate what we buy and when we buy it.

Track and validate finances, not the number of birthday candles

Once figuring out the lifestyle you want to live you get a better picture of what it will cost. Calculate how much money you need, then determine your ideal time to retire. Use a good monte carlo type retirement calculator and start playing with the numbers with different retirement dates. Pull your Social Security estimates and plug into the calculator different benefit start dates and their associated payment amounts.

Is your ideal time to retire before Medicare eligibility? Figure out how and where your retirement medical insurance will be handled and include its cost in your retirement calculations.

Diversify your investments within your risk tolerance and stick to your retirement savings plan. Plug into the calculator different stock-to-bond ratios to understand what impacts it has on your retirement funding success.

If the calculations show your retirement cost and affordability are out of whack, then time to rethink your desired retirement lifestyle. Change your plan. Just like when you can’t afford a Cadillac you instead decide to buy a Buick or Chevy to make it work and still get what you need and most of what you want.

After getting an idea of your retirement financial goals you should track your progress, success, and mistakes. Make adjustments with life’s ups and downs but always move forward toward your financial goals.

Birthdays come and go

Celebrate birthdays but don’t solely count on them to identify your ideal time to retire. Let your planned financial situation do that. Hopefully that happens early enough that there will be many birthdays to celebrate in retirement.

Seek information and get serious about retirement planning. The earlier we do this the easier it is to take control of our future. If you need or want help, seek professional assistance from a CFP. Hopefully if asked when you plan to retire you can say with confidence in “X” years and have the details to back up why and how. Remember that even if you try to better your finances and fall short, or your ideal time to retire still depends solely on your waiting for Social Security and/or Medicare, you are much farther ahead than if you had done nothing to take control of and better your personal finances.

Now let me ask you, when is the best time to retire?

The Part-Time Jobs All Retirees Should Consider

Funding Retirement, Retirement Business, Working In Retirement,

The Life Insurance and Market Research Association reports that 51% of the population retire between the ages of 61 and 65. Experts state that in order to enjoy your retirement, you should have $1.5 million in savings before you leave the workforce. Yet, individuals aged between 55 and 64, typically have just $120,000 squirreled away. Therefore, in order to pursue your early retirement dream, finding an enjoyable part-time job to keep your finances above board is the way to go.

The Part-Time Jobs All Retirees Should Consider

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3 Part-Time Jobs All Retirees Should Consider

Pet sitting

For retirees who love animals, becoming a pet sitter could be the perfect part-time job. The job isn’t too strenuous and you’ll get satisfaction from looking after various furry creatures. According to one survey, 40 million American pet owners opt to holiday at home each year rather than abroad due to inadequate pet care options. With 88% of owners stating their pet is happiest at home, your role as pet sitter will involve you regularly visiting the pet in their own home, providing fresh food and water, exercise where appropriate and of course some love and affection.

Cash in at Christmas

Many retirees don’t want a year-round job as it can hinder their retirement plans. If this sounds like you, then taking on a part-time role over Christmas could be the perfect compromise. Companies of all sizes hire thousands of extra staff over the holiday season, with the likes of UPS taking on 95,000 in the lead up to the big day last year. Other options include writing and sending Christmas cards for individuals who are too busy to take on the task themselves, working in a Santa’s grotto as an elf or even the big man himself. Retail jobs are also plentiful at this time year or you could work on a market stall selling your own festive goods.

Become a driver

If it is more regular work you’re after then becoming a driver could be just the job for you. By opting to buy your own van or minibus, you could help people move home or ferry people around to events. However, when you do set up your own business, it’s essential you take out the appropriate vehicle cover, including insurance. Alternatively, you could become a delivery driver for one of the country’s takeaway restaurants. As Statista reports that 10% of Americans use these delivery services once a week and with Cowen predicting that the delivery market will jump by 79% within the next four years, you’ll find there are plenty of places willing to hire a retiree for the role.

 

With millions of individuals retiring early, many don’t have the financial backing to support them through their retirement years. Therefore, taking on a part-time job is the perfect solution. Thankfully, there are a variety of jobs out there which will suit your new lifestyle, so ensure you consider all options before adopting a new role.

6 Intriguing Home-Based Business Ideas For Retirees

Funding Retirement, Income Streams, Retirement Business, Working In Retirement,

 

Home-Based Business Ideas For Retirees

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Retiring doesn’t have to mean you stop working if you don’t want to. Keeping busy and challenging yourself is a great way to stay active, both mentally and physically. In fact, retiring is the perfect time to start a passion project, creating a business just because you want to do it — not because you have to. Here are some great ideas for you to start your own business, right in your very own home.

Get writing

A lot of budding writers say their least plentiful but most valuable resource is time. There’s just not enough hours in the day to work fulltime and write as well! But now you’re retired, you’ve got an abundance of time, and these days there are plenty of ways you can make money from writing.

For a start, you could start blogging. Writing regularly about something that interests you can be a great way to build up followers online who share your interest. Once you’ve amassed a following, you could place PPC, CPA or CPM ads to earn a little money on the side.

Or you could host sponsored content on your site from businesses related to your blog, charging a little each time. There’s lots of ways to make money blogging, so do a little research and see what’s on offer.

On the other side of blogging, there is the ever growing self-publishing and copy-editing industry. With a huge need for high-quality online content, you can help businesses with their content, or fulfil your dreams of becoming an author. The best self-published books tend to be in a popular sub-genre, don’t cost a lot of money, and come as a series. To establish yourself as a copy-editor, put some listings up on freelance sites, and collect client testimonials and ratings.

 

Start your own radio station

If you’re passionate about something but you don’t have the chops required to write regularly about it, why not start your own radio station? With the rise of the internet, you don’t need to have an aerial and sophisticated recording equipment anymore. Instead, all you basically need are an internet connection and a microphone!

There are plenty of affordable radio hosting services online that make it quick and easy to start broadcasting. Once you’ve gotten your name out there and built up a good listenership, you can start offering ad space to businesses from your field of interest.

Similarly, podcasting hosting is something that more and more people are embracing. It’s a pretty low-cost business idea, and if you can find a good topic to podcast about, it’s one that is likely to take off pretty quick as the popularity of podcasts continues to grow.

 

Become a professional coach

Throughout your career, you’ve probably accumulated a wealth of knowledge, skills, and wisdom. A lifetime of learning (and making a few mistakes along the way of course!) has given you a deep well of experience. But just because you’ve retired doesn’t mean it ends there. Why not share it with others and become a professional coach?

There are plenty of people out there who want to learn from you, to get firsthand advice that will help guide them in their career. Maybe you managed a successful business before you retired — that will have given you exactly the kind of hard-earned knowledge that young entrepreneurs could benefit from. Create an online profile that showcases your work history and start networking. You’ll find scores of people willing to learn from you!

 

Become a tutor

Instead of passing on your knowledge to people in the workplace, why not pass it onto people in school as well? Parents want their kids to do the best they can, and will happily pay for someone to give them extracurricular lessons outside of normal school hours if it gets them ahead.

You don’t necessarily need to have any qualifications to do this, you just need to be knowledgeable about something. It could be a hobby like playing an instrument or a sport, or you might have a passion for maths or history that you’ve nurtured over the years. Pass on your knowledge and passion to the next generation and help them grow because of it.

 

Start a second-hand store

After a lifetime of working hard and raising a family, you’ve no doubt accrued a trove of bits and bobs. Record players, furniture, collectibles, clothes — the ephemera of life can build up very quickly without you even realizing it. It might be tempting to just take them all down to the junkyard and get rid of them, but as the old saying goes: one man’s trash is another man’s treasure. So why not sell them online?

Now you’ve retired, you’ve got plenty of time to start going through your old things and finding what can be reused. Even if it’s broken, you might find it a nice little side project to fix it up too. Digital marketplaces like Amazon, Etsy, and eBay are easy to use, and with the entire internet at your fingertips, you’re bound to find someone willing to buy what you’re selling.

 

Turn your hobby into a business

Most of you reading this will have a hobby of some kind: gardening, playing an instrument, baking, photography, model-making, the list is endless. While it might have kept you busy in your leisure time before retiring, and even provided some comfort to you when you needed a distraction, you might never have imagined it could provide you with an income.

However, retirement is the perfect time to start making money out of that thing you enjoy doing most. For example, if you enjoy gardening, you could offer your services out to others, of course. Or you could create an ebook or video tutorials on gardening to share your knowledge with others. Almost every hobby can be monetized, you just need to find the right angle….

 

For some, retirement might be the perfect time to put your feet up and have a well-earned rest. But for others, it might be an even better time to really get busy. With so many business ideas out there that you can start today from your own home, why sit around twiddling your thumbs? Get thinking and start your business today!

**If you want to see more on starting a home business, check this out- How to Set Up a Small Business at Home. 

This is another informative post contributed to Leisure Freak by author Kayleigh Alexandra.

Kayleigh Alexandra is a content writer for Micro Startups — a site dedicated to giving through growth hacking. Visit the blog for your latest dose of startup, entrepreneur, and charity insights from top experts around the globe. Follow us on Twitter- getmicrostarted.

Unusual Ways To Increase Your Savings Before Retirement

Funding Retirement

Planning for retirement will involve a lot of hard work. It is essential that you make sure you have as much money as possible in your account when you stop working for a living. While there are lots of commonly talked about retirement and saving schemes that you can use, some people like to think outside of the box, and so there are some unusual ideas on this page that you might want to consider. Take a moment to read the information below and see if you can use any of it to your advantage. Hopefully, these suggestions will help some readers to get more cash in their accounts and raise their quality of life after retirement.

Unusual Ways To Increase Your Savings Before Retirement

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Sell your collectibles

 

Lots of people spend their entire lives collecting original toys, and other items they claim will increase in value. If you made the right moves during your working life, there is a chance that you might have lots of collectibles you could sell before retirement to raise some extra cash. That could give you extra money or help to clear your debts. Sure, that strategy means you’ll have to part with the items you’ve spent years buying. However, you almost certainly justified those purchases by claiming they were investments. So, now is the best time to work out the value of all those items and place them in niche auctions to ensure you get the best prices possible.

You may be surprised about what you have that is considered collectible. Many high quality used items from your past may have a bigger resale value than you think. Some quick online research may surprise you. I found in my closet my old and forgotten 1986 Air Jordan sneakers that I used to play basketball that I had stored in their original box. I discovered there was a collector market for them and eBay bidding returned a tidy $1084. Look around, you never know what you may have.

 

Seek any compensation

 

There are various limits on how much time you have to seek compensation following an accident or injury. Take the time to think back to your working life during the last decade. Did you have to take time off work or end up in the hospital due to the negligence of your employers? If so, now is the best time to meet with this lawyer or other industry experts to determine whether or not you still have a case. In most instances, it doesn’t matter if you still work for the company or not. The legal professionals you consult will hear your story and let you know if they can assist.

If you have experienced loss due to another’s negligence, then don’t allow some overall sense of loyalty or disdain of taking legal action hinder your right to be compensated. I know that I “took it for the team” on a couple of occasions during my long career. I quietly toed the company line without compensation and now have to  live with those injuries from long ago.

 

Unusual Ways To Increase Your Savings Before Retirement

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Research your family history

 

Many people start researching their family history when they retire. However, you need to do that for financial reasons, and this section will explain the ins and outs. There are thousands of people in the US entitled to benefit from their deceased relative’s estates. However, most of those folks never make claims in court for the money because they are unaware it exists. Maybe you discover you had a wealthy uncle who didn’t have any children? That could mean there is money in the pot for which you are entitled if you state your claim in court. Many times, a simple search for State’s unclaimed property will result in finding family names, both living and passed. It’s not a guaranteed strategy for boosting your finances, but it’s worth considering.

 

You have come to the end of this post, and so you should now have some unusual ideas for increasing your savings before retirement. Any additional funds to your life’s retirement savings will add tremendously to your retirement. Take a moment to think about each of the suggestions on this page, and then push ahead with the one that gives you the best chance of success. If nothing else, use these less common ideas to spur your own thoughts of unusual ways to increase your savings before retirement. Nobody wants to struggle for cash when they stop working, and so there is no time to delay!